Many people will have heard of the Rank Group PLC, knowing it as the owner of both Grosvenor Casinos and Mecca Bingo – two popular brands across the United Kingdom. And so vast is this brand, that it has announced its year-end profits, with a guidance of £40 million recorded.
That is an impressive return for the company, considering it has been experiencing the continued threat of difficult trading conditions on the various retail venues it possesses across the country. In fact, within the report, it emerged that footfall within its Grosvenor establishments – those found within London in particular – has continued to decline as cost of living starts to bite.
This hasn’t stopped it from garnering full-year profits for the 12 months ending June 30, 2022, though. And while that is great news for the Rank Group, it isn’t all happy sailing from here on out. Even though it has recovered 90% of its yearly pre-pandemic revenue, it also looked to the future as being incredibly uncertain and likely difficult thanks to the ever-rising cost of living in the United Kingdom.
The company said that the upcoming months will prove to be “challenging” thanks to “high inflation hitting consumer discretionary expenditure and inflationary cost pressures”.
Results of Previous Year Provide a Happy Outcome
The data included in the report up to June 30, 2022, by Rank Group features various positive figures and information. Net gaming revenue (NGR) for the company from the period stood at £644 million, which was double the corresponding period for 2020/21. While that is great in itself, Rank only stands 10% behind the figure reported in its 2019/20 results, which stood at £715 million, and was, for the most part, pre-pandemic.
Unexpected softer trading across its Grosvenor establishments was reported for the second half of the year by CEO John O’Reilly. He commented on “weak customer volumes” being experienced within its nine casinos found across the country’s capital city, which usually account for more than 38% of the revenue brought in by Grosvenor under normal trading conditions. He also noted that overseas visitor numbers had declined, with the figure only starting to increase again within the final few weeks of the time period noted.
Yet despite the issues surrounding the Grosvenor casino venues across London, both the unit of Grosvenor and Mecca Bingo owned by Rank Group registered an underlying NGR for the 2021/22 period of £460 million. That marks a 209% increase on the same timeframe from 2020/21, which stood at just £149 million.
Some of the success this time around could also be attributed to the fact that the company’s proprietary platform, known as RIDE, became much more effective. All of its online brands, with the exception of Grosvenor, were migrated over to the RIDE platform, and underlying digital NGR increased by 4%, standing at £183 million in total. It was also reported that Rank saw a 6x increase in operating profits from the digital scene, which it stated was due to the takeover of Stride Gaming’s brands. That took place towards the end of 2019 and cost a total of £115.3 million.
O’Reilly commented on the improvements made in the digital business area, noting that the transfer of all Rank brands to the proprietary platform offers support for revenue growth. It also provides “a strong improvement to operating margins”, which he expects will accelerate once the Grosvenor brand is also migrated across to RIDE.
The Future Looks Quite Hazy
While the reports surrounding the 2021-22 period suggest a great outcome for Rank Group, there is a lot to get through in the near future for the company. “The trading environment across the UK is likely to remain difficult in the months ahead”, said O’Reilly.
In the past year, energy costs associated with Rank’s venues shot up to £23 million, whereas one year prior, the cost stood at £13 million. For the coming year, the company expects it will cost about £46 million to keep things running, based on the current market prices provided.
Rank is currently benefitting from a stronger cash position, though. And this has led to it advancing its Group Transformation Programme, which went on to deliver goods returns from its £6.2 million Grosvenor investment into new product. Additionally, casino refurbishments costing £5.3 million have been carried out, which will hopefully draw more people back into them.
The group also provided a trading outlook, with the underlying NGR for the 2022/23 period running at 3% more than that of the previous year for the first seven weeks.
Of course, a lot of the trading capabilities of Rank’s brands, both online and offline, will be determined by the ever-delayed white paper from the UK government. Due to Tory party in-fighting, the wait for a new Prime Minister to be appointed, and more, the paper on gambling reform in the UK has been pushed back time after time since its initial publication due date back in December of 2021. “We were disappointed by the delay to the publication of the UK Government’s white paper on gambling regulation”, said O’Reilly.
He went on to comment that both the bingo and land-based casino sectors within the country have long been waiting for some form of modernisation to be introduced to the law which governs them. This, he said, was recognised by the government when they decided to reform the gambling legislation in the first place. “We expect Rank to be well positioned to benefit from the review when it concludes”, he noted.
The future remains murky for not only gambling businesses, but businesses in general across the UK as far as the inflation levels and cost of living crisis is concerned. Rank Group is certainly putting a brave face on things, and it is likely true that it will be able to navigate its way through any changes made via the white paper as well as the general country problems at the moment. That may not be so true for other gambling operators or companies in the sector, but time will tell.